Not long after some of the last fourth-quarter financials were released last week, unofficial word started coming that first-quarter sales for wireless services don’t look so hot.

Stifel Nicolaus analyst Christopher King earlier this week lowered his postpaid net subscriber forecasts for the first quarter for both Verizon Wireless and AT&T, saying recent checks suggest a meaningful slowdown in new subscriber activity.

King reduced his postpaid net add forecast for the first quarter by 300,000 at AT&T (to 450,000) and by about 350,000 at Verizon Wireless (to 639,000). King’s note referenced what could be some near-term cautious commentary coming from management teams over the next couple of weeks at various investor conferences and CTIA.

Possible factors cited for the slowdown include the economy, poor weather, faster-than-expected market saturation and consumers waiting for potential iPhone carrier changes.

Bad weather certainly could affect phone sales, especially for the majority that still like to go to a physical store to buy a device, although once the weather clears up, you’d expect some of those who were planning to buy to follow through.

The economy is another understandable reason and may be why some no-contract carriers are feeling pretty good about their business. A segment of consumers might still be holding out for AT&T to lose its exclusivity on the iPhone, but my suspicion is that won’t run out until next year, or five years after the first iPhone debuted. (I have no insider knowledge; it’s just a guess.) As for market saturation – probably most wireless executives saw that coming a mile or 10 ago.

King’s note came after Bernstein Research analyst Craig Moffett last week declared that “wireless simply can’t be described as a ‘growth’ industry anymore.” Moffett pointed out that wireless industry revenue growth in the fourth quarter was 2.6 percent and for all of 2009, wireless industry revenue grew just 3.3 percent.

Bernstein analysts project further slowing in postpaid, with an expectation of 2010 postpaid subscriber growth of just 1.2 percent. Prepaid is expected to grow 18.2 percent, and much of that is attributed to M2M subscriptions that contribute little to revenue.

It should be noted that Moffett is the same person quoted about one year ago as saying the wireless industry was “collapsing” and the whole wireless business was “grinding to a halt.” You get the idea where he’s coming from.

Something else of note: Moffett says as traditional wireless services mature and emerging services continue to expand, the difference between what investors thought of as a “subscriber” and the reported data on subscriber growth going forward will diverge more and more. The reporting structures currently in place were designed for a traditional voice handset environment, not one where the “growth baton” has been handed off to Kindles and iPads and other yet-to-be invented devices, he says. It’s a good point. For quite some time, there’s been talk of creating new metrics to reflect industry changes, but I’ve yet to hear a clear answer on what those metrics are going to be.
Is the sky falling and therefore we should expect a dismal feeling at the CTIA show later this month? I don’t think anyone in the wireless industry would be surprised to see slower growth after attaining a U.S. penetration rate of around 90 percent of the population. In fact, it seems that we’ve been talking about “slower growth” for a quite a few years now as it relates to traditional new subscribers. 

Hence, carriers are looking at adding more M2M sales and other emerging categories to add more users or usage rather than single subscribers or additions to family plans. I’m not suggesting emerging devices on their own are going to rival all those new net adds that wireless carriers enjoyed for years. M2M traditionally has not been a high-ARPU business. But it’s one area, along with numerous verticals, that the wireless industry has identified as an area of growth. Last time I checked, some wireless carriers were at a conference in Atlanta this week touting their wares to the healthcare industry.

The industry may not be growing in the same way it was for many years, but it’s moving in other directions to find growth.

We’ve been told to expect it and it’s finally here: Rising data revenue is failing to offset declines in voice. During the fourth quarter, Verizon Wireless, Sprint and Canadian carriers Rogers Communications and Telus all reported declining ARPU despite rises in data sales. 

Verizon’s ARPU fell 2.2 percent in the fourth quarter despite rising data sales, which now comprise $16.24 of sales per customer. Sprint’s ARPU dipped 1.78 percent while its data sales rose to $16.75 per customer. Up in Canada, both Rogers and Telus reported declines in ARPU despite growth in data revenue.

For the most part, Sprint attributed the decline in voice revenue to lower usage and falling roaming charges. Verizon didn’t give a specific reason for the decline in ARPU, but given the growth in its data sales, it’s a safe bet it saw voice usage fall as well. Similarly, both Rogers and Telus said voice usage and roaming sales were down as well. 

This could, of course, be a trend stemming from the economic recession, but I think we’d have seen it a lot earlier if that were true. It’s more likely that data is a more preferred method of communicating for a growing segment of the population. 

Speaking for myself, I’d rather send a text than make a phone call unless I’m talking to my parents: My mom is somewhat perplexed by texting and my technophobic father is a landline devotee who doesn’t have an answering machine, much less a cell phone. I consistently use more text messages every month than voice minutes, as does one of my coworkers. Last month, he spent just 179 minutes talking on his iPhone but sent 600 text messages. As he puts it, it’s like chatting online. 

I know we’re not the only subscribers out there who communicate like this. To be sure, one of the fears early on about SMS was that it would cannibalize voice minutes. Verizon Wireless, AT&T, Sprint Nextel and T-Mobile USA have all increased their SMS rates from 10 cents per message to 20 cents per message without a monthly texting plan.

It’s not clear how fast data growth will offset declines in voice revenue. AT&T was one of the few Tier 1 operators that managed to boost its ARPU last quarter. Of course, it benefits from iPhone traffic, but its data sales are actually a smaller percentage of overall ARPU, at 28 percent, than Verizon’s, whose data sales comprise 32 percent of overall sales. That means that whatever AT&T is doing to keep voice sales strong appears to be working despite those iPhone users who complain about dropped calls. 

BARCELONA—By early accounts, it looks like this week’s Mobile World Congress drew more attendees than last year’s event, pushing up to the 50,000 mark. Regardless of whether the show added another 3,000 over last year, it succeeded in creating some buzz. Much of it was around applications, “open” and its definition in various parts of the ecosystem, and talk about that impending capacity crunch. Here are a few reflections over the past four days.

Microsoft: It´s Everywhere!
Microsoft was all over Mobile World Congress, as you might expect, but you didn’t find a Windows 7 phone at Microsoft´s booth because it doesn’t yet exist. The company was showing demos on phones running Windows Mobile 6.5, but 7 is such a far cry from 6.5 that I´m not sure how insightful a 6.5 demo was for visitors.

Microsoft executives say they did a complete overhaul on their phone platform, starting more than a year ago, so to create a divide between the old and the new, they’re calling it a “Windows Phone” instead of the old Windows Mobile. Subtle, to be sure, but I guess if you want to communicate a change, you’ve got to start somewhere.

Beginning with Steve Ballmer’s appearance, the company pulled out all the marketing stops on this one. A booth staffer told me the exhibit was shrouded in curtains until shortly after Ballmer made the Big 7 announcement from a nearby hotel on Monday afternoon. Judging by the throngs that I saw milling around Microsoft´s booth and demo, a lot of show attendees were interested in seeing this. Based on initial impressions, it looks like they’re doing a lot with it but I was haven’t seen enough details to make an educated call on whether this will bring Microsoft back from the brink in mobile.

Samsung Wave: Also Everywhere
You´d have to be walking around with your eyes closed not to notice at least one of the many signs Samsung installed in and around the Congress. A quick look at a prototype Wave at Samsung´s booth showed it’s the real deal. The AMOLED display was impressive. Who needs HDTV?

The Wave features some things that have become standard on most new phones: quick access to Facebook and various other social networking sites and widgets. This is a bit of an understatement, but I’ve seen a lot of new phone models sporting the widget theme these days. Some years back, Sony Ericsson execs – yes, that Sony Ericsson – showed what was on their road map and it appeared to be the same tile-like things that Microsoft and seemingly everybody else it talking about. With everybody going the same direction, what’s going to differentiate?

Verizon & Skype
Verizon Wireless was about the last carrier I would have suspected to forge a deal with Skype. In fact, if anyone had a bone to pick about this post  last week, my first guess would have been someone in the Verizon camp. As Verizon Wireless Chief Marketing Officer John Stratton joked during a joint press conference this week, the carrier has been the source of a lot of speculation in its day, but anyone who heard something like this one probably wouldn’t have believed it.

No kidding. Verizon is the second major carrier, after 3 in the U.K., to work directly with Skype on a solution? Hardly believable, but there is it. It was a mere couple of years ago that I met with Skype representatives off-site here at MWC, and the big topic was how were they ever going to get mobile operators to come around to their way of thinking?

Their tenacity paid off. It’s worth noting this service will be running over Verizon’s cellular network, so the quality issue is resolved to a great deal, and voice and data plans are still required to get the free Skype service only on certain designated smartphones.

It does seem as though Verizon was the one that could most benefit from an international VoIP calling service. Despite for years having Vodafone as co-parent, I never could understand why the carrier didn’t more fully capitalize on the international roaming front. I know, it offers some world phones now, but it’s still not the ideal international roaming carrier.  I know Stratton was very clear on wanting to get at some of those 200 million American subscribers who are not on Verizon’s network. I’m not sure how far this maneuver is going to go, but it’s got to have some impact.

Of Course, The Google Factor

Maybe it was the Google Goggles demo that got my cynicism in an uproar. I’ve used Goggles on a Nexus, to mixed results. Sometimes it came back with some bizarre info. But it seemed to perform OK during Google CEO Eric Schmidt’s keynote on Tuesday evening.

A couple times during his prepared remarks, I got the impression – reading between the lines here – that he was saying, Gee, wireless industry, thanks for all these terrific networks. Now let us have at it and deliver some really great, even magic, services to show what can be done. Because, you know, you haven’t seemed to have figured it out on your own.

Now, he didn’t say any such thing, this is merely a thought that traveled through my head. About 90 percent of the speech was a “let’s play nice together” kind of message. And what really made it memorable was the Q&A that followed the prepared remarks and demos. Even if one questioner challenged him straight on, he didn’t outright dismiss him, nor did he cut the entire session short. He took a lot of questions from the audience and came off more like a college professor interested in a meaningful exchange of ideas than a corporate big wig who might be more comfortable just about anywhere else.

Schmidt acknowledged that wireless networks inherently have constraints on them, and surmised that operators probably will need to use techniques like tiered pricing so the heaviest bandwidth users pay more than those who use a fraction of it. He also plugged cloud computing quite a bit. And he expressed his concern that the same kind of media from different sources be treated the same, regardless of whether it’s from YouTube or somewhere else.

He was asked about Google Voice, to which he replied: “It’s not our objective to steal your minutes.”

Steal or no steal, people are still very suspicious of what Google is up to, or what will happen if it gets any bigger and more powerful than it is already. One audience member brought up the more philosophical idea of whether a big company can really be expected to abide by that “do no evil” mantra in all walks of life. Sounds like another topic of discussion.

Every month when I get my wireless bill, I look at the number of unused minutes and texts and start ranting. "That's it, I've finally had it," I say. "I'm going prepaid."

Except I don't.

My service plan fits me like a size 2 foot in a size 15 shoe. So far in February I've used zero of my 5,000 night and weekend minutes; 55 of my unlimited mobile-to-mobile minutes; 11 of my 450 anytime minutes; and sent just 28 of the 1,500 text messages available in my plan.

On average, I pay over $60 per month for the 120 minutes of voice and 150 text messages I send every month. My rollover minutes go to waste and my text messages go unused.

The contract on my first phone – which broke after four months from biking in the rain too often – is long expired, as is the contract from my fourth phone – which died in a beverage-related accident during grad school. (I bought my refurbished second and third phones from a local cell phone repair shop.)

Given my propensity to destroy anything and everything with circuits, it's really not worth my while to renew my contract in exchange for a fancy new handset. I'll just break it.

My current phone, a low-tech, indestructible Nokia model that draws sneers from techies, has lasted me over two years – a record in my book. It texts and calls just fine, which is all I use it for.

So why do I stay with postpaid service? Laziness, most likely.

During my monthly bout of aggravation with my service plan three weeks ago, I called AT&T to see if I could switch to its Go Phone prepaid service. The answer: yes – but I could only do so at one of its carrier stores, which happens to be located halfway across town. I don't have a car. None of my friends have cars. Hauling myself halfway across Madison, Wis., to deal with a store clerk on my day off does not sound like fun to me.

I suppose could sign up with a prepaid carrier like Boost Mobile, but I don't want to have to buy a new phone. First of all, I don't want to spend money on one. Second, I like my phone. It's like a raggy old sweatshirt I wouldn't wear in public, but that I can't bear to part with. I don't want to give it up for another carrier.

I'm also worried about coverage. I might not use my phone for anything but talking to my family and texting my boyfriend, but I need my phone to work at trade shows around the country. The last thing I need is zero bars when I'm on deadline in some random conference center.

Despite complaints from all those data-heavy iPhone users, AT&T's basic coverage has never failed me. I have grown accustomed to the sight of those comforting bars. I fear that prepaid coverage isn't as good as postpaid – a concern that's probably not entirely rational – but my ability to do my job during crucial times of the year depends on my cell phone coverage. AT&T's network is my safety blanket.

All of this makes me sound pretty lazy, but I don't think I'm all that different from the majority of wireless subscribers. Like everyone else, I'm busy. Most days of the month I have better things to do than fret over the massive amounts of unused texts and voice minutes on my service plan.

Dean Bubley's blog, titled "Customer loyalty, tolerance and contempt", sums up my situation pretty well. As Bubley puts it, many operators seem to confuse inertia (i.e. people being too lazy to switch) with loyalty. I think most people, including myself, fit into the first category.

I suppose there's really no logical reason I need to stay on a postpaid plan. After thinking about it some more, maybe I'll go prepaid after all. Maybe. I just don't think I'm aggravated enough.

Well, it’s final. I’m Googling my life, as well as my iPhone, and I’m not looking back. It’s taken me a while to get to this point. Changing my e-mail and mobile number are seemingly monumental tasks. Just think of all the account settings I’ll have to change, all the friends and associates I’ll need to contact with my new number and e-mail. I’m going Taoist on this one. Go with the flow. If I miss a personal call or two, it certainly won’t be the end of the world. 

In the past, I’ve struggled to understand what Google was up to with many of its initially half-baked offerings such as Google Voice, Wave and Buzz. What redeems these offerings, at least in my mind, is that all of these products have some ingenuity behind them, some imagination and possibility. I struggled to really integrate them, but then that wasn’t all Google’s fault. 

The two biggest reasons that I didn’t use these services when they first came out was in large part due to the fact that they really were flawed. However, it was also because I didn’t use the Gmail account I’d set up (Yahoo! has been my personal account for years), and Apple’s highly publicized rejection of Google Voice made that service a non-option. Still, I was intrigued. 

I think I officially turned the corner when Google rolled out Google Voice in an HTML5 version that runs on the iPhone. I spent a few weeks investigating the service as a potential user of all of GV’s features and not as a hands-strapped iPhone user. Those couple weeks have made me a believer. While the voicemail transcription still leaves a lot to be desired, the full product offers a lot more options than Apple’s native voice calling applications.

The possibilities inherent in a Gmail account combined with Google’s suite of online and mobile services are hard to deny. Google offers the most convincing means to centralizing and accessing all of my online and mobile data, and it does so with what I believe is an eye toward a more open, less fragmented, vision for mobile technology in the future.  

In my opinion, Apple is pretty darn close to jumping the shark on a number of issues. For instance, the idea that proprietary USB and SD card adaptors ($$$) on the iPad were necessary is not only environmentally unfriendly, it’s also tasteless and unimaginative profiteering on Apple’s part. Lack of multi-tasking and Flash support on the iPhone are unforgivable and the result of a company that is drunk on the idea of technological hegemony. The App Store’s vetting process is arcane and most definitely not in the best interest of its loyal customers.

Android is yet another reason for my migration to Google’s services. I think that Google’s mobile platform, in conjunction with some of the proven OEMs on board, will eventually mean an army of devices that dwarf what Apple will do with the iPhone. Don’t get me wrong, I love my iPhone. It’s still one of the best pieces of any kind of hardware on the market, but I’m skeptical that Apple is prepared to embrace a future that depends more on conglomeration than isolation.

I’m not sure I’ll use Google Buzz or Wave. In fact, I doubt they’ll see widespread adoption. But then I’m not making this decision because Google has some queer penchant for offering a social networking service. I’m doing it because Google has demonstrated and stuck to its philosophy of openness and that is key to innovation going forward.

Does Google’s size and vast stores of personal information scare me? Slightly. Do I find Eric Schmidt’s I-know-more-than-you-do smile a little bit creepy? Yes. However, I’m a user of technology—presumably will be for some time to come—and right about now, I’d rather have my personal information in Google’s open hands than Apple’s closed fists.

Now, if you'll excuse me, I have to go investigate the announcement Google just made that it will deliver a high-speed broadband testbed.

Myriad reports, originating with Wired over the weekend, are relaying what Apple CEO Steve Jobs said or allegedly said during a town hall-style meeting with employees last week after the big splash of the iPad announcement. (Stop with the iPad jokes already; has no one ever written on a pad of paper?)

You’ve no doubt seen the headlines about Jobs' comments. A few of the big ones, paraphrased here: Google, or more specifically, Android teams within Google want to kill the iPhone, and Google’s Don’t Be Evil mantra is either BS or crap. Jobs also reportedly said that Adobe is “lazy,” or something to that effect, and he may have been comparing today’s Adobe to the one of years ago.

I wasn’t there, so I have no idea what Jobs did or did not say. So far, Apple hasn’t said anything official one way or the other that I’m aware of. But assuming the general themes of the reports are true, none of them should come as too much of a surprise. Inflammatory and, like, “Wow,” come to mind. But anyone watching the Google/Apple relationship from the sidelines can see there’s friction brewing (or boiling) there, although it should be noted that Google CEO Eric Schmidt, in an earnings conference call last month, said Apple is a “very well run” company with “a lot of very good stuff coming.” He merely acknowledged that Google competes with Apple “in a couple of areas.” Ah, yeah.

As for Adobe, I don’t think it deserves the adjective of “lazy.” People for years have been asking when Flash would be available on the iPhone, and it always appears to go back to Apple’s court. It looks like Adobe engineers have tried all kinds of things to make Flash work on the iPhone. At MAX 2009 last year, Adobe announced the Packager for iPhone to allow Flash developers to create native iPhone apps. At the time I talked with Adobe representatives, they didn’t think Apple would have a problem with that. However, it was designed as one way to bring Flash to the iPhone; what was then and is now still lacking is Flash Player for the Safari browser.

The other big declaration that Jobs made last week – and this was in the public domain – is that Apple’s mobile device business, based on revenue, is even bigger than Nokia’s. A few people took exception to that, including Nokia.

Initially, I raised an eyebrow at Jobs’ assertion but let it go. After reviewing the video of his keynote now posted on Apple’s site, Jobs is actually counting iPods, iPhones and Mac laptops. I get that these are all mobile devices in the sense that you can take them pretty much wherever you happen to go. I also get that many products in the emerging device category are not your traditional devices. But I just don’t get counting these types of devices quite in the same way you count the mobile and converged devices coming out of Nokia. Maybe I’m just old-fashioned.

There’s no doubt that Apple has been and is a brilliantly innovative product company. There’s no doubt that Nokia really, really needs to bring a “wow” device to the U.S. market. But let’s look at some numbers. In the last three months of 2009, Apple sold 8.7 million iPhones, 21 million iPods and 3.36 million Macs, totaling about 33 million. Nokia shipped 126.9 million mobile devices in that quarter. There’s a big difference there. 

In its latest handset research release, Strategy Analytics puts Nokia’s fourth-quarter smartphone market share at 39 percent and Apple’s at about 16 percent. Research In Motion (RIM) had about 20 percent share in the quarter.

To say that Apple is the No. 1 mobile device company in the world might be accurate if you include a qualifier in there, such as “the No. 1 mobile device company in the world that sells the iPhone.” But really, to declare itself the largest mobile device company in the world rings a bit disingenuous.

When my colleague Andrew Berg read my article on Motorola’s earnings earlier this morning, he yelled over the wall separating our two desks to point out that despite the 24 percent drop in handset sales, Motorola is actually doing pretty well for itself.

After a little while, I agreed. Here’s why: For a moment, let’s ignore for the precipitous drop in sales. Motorola has introduced several well-received devices based on Google’s Android, which was recently predicted by IDC to grow faster than any other operating system over the next four years. Motorola says it will launch at least 20 – that’s right, 20 – smartphones over the next year. Motorola clearly aims to ride the Android wave back into profitability.

Motorola is going after the high-end market, a marked shift away from the mass market appeal of the RAZR. Amazing as they may be, high-end smartphones just don’t ship in quite the same volumes as lower-tier devices: Of the 12 million handsets Motorola shipped last quarter, just 2 million were smartphones. Motorola’s double-digit sales decline could be attributed as much to its shift to a high-end product mix as it could be attributed to the slackening popularity of its other devices.

Motorola also says it will continue to evolve its MOTOBLUR platform, which syncs conversations, contacts and content from social media sites. The intuitive UI has proved popular among consumers, and Motorola’s pledge to improve the platform is a step in the right direction.

On the financial side, Motorola’s handset division continues to struggle but its cash hemorrhage has slowed to a trickle.  The company cut the division’s full-year losses in half and was just $132 million in the red for the fourth quarter. It’s a lot of money, yes, but a vast improvement over last year’s loss of $595 million. 

As for Motorola’s two other divisions, the figures there are also a bit deceiving. Sure, sales declined, but the infrastructure market as a whole is contracting. Both segments were well in the black for the fourth quarter, which is more than can be said of some of its larger network brethren. 

Rumor has it that Motorola has put its break-up plans on hold. Perhaps Greg Brown and Sanjay Jha will succeed in pulling Motorola’s handsets into profitable territory after all.